Tag Archives | contractor

What is a Staffing Agency?

See also:
Recruiting vs Staffing
What the Current Hiring Process Costs
When You Know It’s the Right Hire

What is a Staffing Agency?

A staffing agency is an entity that has employees that can be hired out for temporary or long term work. A staffing agency is also referred to as an employment agency. It provides temporary workers. Some agencies are industry focused or specialized. For example, The Strategic CFO’s staffing line focuses on accounting and financial positions.

Staffing agencies are different from placement agencies or retained search services. Placement agencies collect a fee to recruit a full-time employee. Those employees belong to the client company – not the agency.

How Do Staffing Agencies Work?

Staffing agencies conduct both the hiring and firing of employees. They also pay for the employment taxes, Medicare, Social Security, etc. The client company specifies the amount of temporary workers needed and the hourly rate. Frequently, the agency specifies the hourly rate for each worker, but it is negotiable.

Why Hire a Staffing Agency

One would hire a staffing agency if they need employees now and they want to offset employment costs (benefits, employment taxes, etc.). There is either a time constraint or a resource contract. Some of the benefits include getting a number of employees quickly and knowing that they are qualified for the position.

Oftentimes, agencies have run credit reports, criminal background checks, and drug tests on those employees so the client never has to worry.

Difference Between Hiring and Working For a Staffing Agency

Whether you are seeking to work for an agency or hiring an agency, there are several things that you need to know.

Working for a Staffing Agency

When you work for an agency, you can expect to work with companies for anywhere from a couple of months to a couple of years. You are technically an employee of the agent and working with the client. However during your time at a client’s office, you act as a regular employee of the company. In some cases, companies will hire the employee from the staffing agency. This is a great opportunity for those employees as they get exposed to different industries and company cultures. Temporary work also allows you for you choose your own schedule. Only want to work a couple days a week? Or have the summer off? Some agencies will work around their staff.

The Strategic CFO’s staffing line brings each staffer in every quarter to review their work and to further their financial leadership skills. If an bookkeeper wants to become a staff accountant, then there is opportunity to get the training needed to make that leap.

Hiring a Staffing Agency

When you hire an employment agency, you need to choose the right agency. Are you looking for positions that anyone can do or are you seeking for a more specialized trade? There are staffing agencies that supply manufacturing workers, domestic workers, and/or professional employees.

It is important the client company is communicating often with the agency to get the most out of the relationship. If a particular employee doesn’t fit, then the agency needs to know in order to replace that employee. Agencies have access to a variety of staff and make it their goal to pair the right employee with the client company.

Looking to hire a staffing agency to fill your accounting department needs? The Strategic CFO has recruited the best talent to serve your staffing needs. Interested? Click here to learn more about how we can serve you best.

Staffing Agency

Staffing Agency

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Progress Billing for a General Contractor

Progress Billing for a General Contractor Definition

A construction project typically involves many different trades in order to reach completion. Therefore, it can be just as daunting a task to submit for payment to a client along the way. The Owner of a construction project relies on the project architect, lender and sometimes a third party inspection company to make certain that payment is applied for correctly and within reason. Once the progress billing for a general contractor definition is truly understood, you will smoothly pass through the steps of preparing and submitting everything needed to complete a construction project.

Start the project with a plan to be profitable. Price for profit at the beginning to prevent any cash flow crunches during the completion of the project. 

Start With a Good Schedule of Values

A schedule of values is a list with the dollar amount assigned to each area of work to complete on a construction project. A construction project is broken out by each scope of work and typically separated according to the Construction Specifications Institute Divisions (CSI). Therefore, it is best to separate a project’s Schedule of Values into basic CSI divisions. Examples of these divisions are General Conditions, Sitework, Utilities, Concrete, Steel, etc. Once you define the areas of the scope of work, then a assign corresponding value to each one. Also, establish a percentage complete for each item as you make progress on the project. In the United States the industry standard format for a billing schedule of values is per AIA form G703. Progress billing for a general contractor accounting issues are common, so it is essential to establish a good schedule of values early.

Establish the Rate of Construction Retainage

A construction contract will typically require that “Retainage” be withheld from each application for payment in order to provide the Owner or lender protection from the Contractor not completing the entire project. You may withhold 5% or 10% from each payment to the Contractor. Hold the funds in reserve until you complete the project punch list at the end of the project. Therefore, each progress billing must take this retainage amount into account on each line item of the schedule of values and ultimately on the bottom line of the application.

Establish the Frequency of Progress Payments

A progress billing is exactly that, a billing that progresses towards completion a percentage at a time. Therefore, it is necessary to establish the frequency that you shall submit each application. Often times, a progress billing will be submitted to an Owner or Lender once per month; complicated projects may require more frequency. A progress billing must specify the current period percentage of completion and the cumulative total. Do this for both the individual items and the total.

Establish the Percentage of Completion

Vendors will submit their invoices for payment to a contractor for the amount of work that they have completed over the period. A contractor must confirm the completion of the work according to this percentage. Then the contractor should include the corresponding amount within the progress billing to the Owner or Lender. Perform this process for each scope of work. Then total all completed items percentages.

Submit It Correctly Then Get PAID

Progress billings are often rejected by an Owner or Lender. They reject it because of a variety of issues. Some of these issues include incorrect completion percentages, incorrect math, or applications submitted tardy. In order to achieve profitable progress billing revenue recognition, effective processing is important. Be sure to review vendor invoices and percentage completions with field supervision to avoid over/under billings. Also, be certain to double check math calculations or use construction software to avoid rejected payment applications due to math mistakes. Finally, submit your progress billing forms on time! This is an easy way to get credit with an Owner or Lender because it gives them ample time to review the application.

(NOTE: Want the Pricing for Profit Inspection Guide? It walks you through a step-by-step guide to maximizing your profits on each sale. Get it here!)

Progress Billing for a General Contractor Sample


OWNER: Business X, LLC.


For and in exchange of the sum of $                                , the sufficiency of which is hereby acknowledged, the undersigned Contractor, subcontractor, consultant, materialmen or laborer (hereinafter the “Undersigned”) warrants and represents as follows:

(1) The Undersigned has been employed by Business X, LLC. to furnish labor, materials, or services in connection with the construction of improvements on or to the above referenced project.

(2) The Undersigned has performed all labor, materials, or services required under its Contract, Subcontract or Purchase Order in full compliance with all terms and conditions thereof, and all applicable plans and specifications.

(3) Any and all contractors, subcontractors, laborers, suppliers and materialmen that have provided labor, material, or other services to the Undersigned for use or incorporation into the construction of the improvements to the Project have been paid in full for all amounts due and owing to them on the Project, or shall be promptly paid in full from the proceeds of the payment referenced above and there are no outstanding claims of any character arising out of or related to the Undersigned’s activities on or improvements to the Project. If the Prime Contractor signs this Waiver, then attached hereto as Exhibit A is a complete list of all subcontractors and suppliers retained by such party as of the date of this Waiver.

(4) The Undersigned waives and releases any and all liens, lien rights, claims of liens, and any other claims for payment for labor, material or equipment of any type or description that it may have against the Owner, the Owner’s Project Manager, the Owner’s Engineering Consultant, the Architect for the Project, the Prime Contractor (if this Waiver is signed by a subcontractor or supplier) and/or any person with a legal or equitable interest in Project, arising out of or in any fashion related to, any labor, materials or services furnished by, through or under the Undersigned on, or used in connection with, the Project, without exception.

(5) This Final Waiver and Release constitutes a representation by the Person signing this document, for and on behalf of the Undersigned, that the payment referenced above constitutes full and complete payment for all work performed and costs or expense incurred (including, but not limited to, costs for supervision, field office overhead, home office overhead, interest on capital, profit and general conditions cost) by, through or under the Undersigned relative to the work of improvements at the Project, including all retainage.

More specifically, the Undersigned hereby waives, quitclaims, and releases any claim of damages due to delay, hindrance, interference, acceleration, inefficiencies or extra work, or any other claims of any kind it may have against the Prime Contractor (if this Waiver is signed by a subcontractor or supplier), the Owner, the Owner’s Project Manager, the Owner’s Engineering Consultant, the Architect for the Project, and/or any other person or entity with legal or equitable interest in the Project.

IN WITNESS WHEROF, the person signing this document, acting for or on behalf of the Undersigned and all of its employees, subcontractors, laborers, suppliers and materialmen, executes this document this         day of                               , 20          .



This instrument was executed and acknowledged before me on this        day of                          , 20     , by                                                      , on behalf of said entity.

Notary Public


(Notary Seal)

My Commission Expires: 

Improve Profitability

Progress billing is an important factor that can impact a company’s profitability. Price it right the first time! If you are uncertain of whether you have a pricing problem, download the free Pricing for Profit Inspection Guide and fix it.

progress billing for a general contractor

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progress billing for a general contractor

See Also:
Progress Billing Example
How to Maintain an Effective Job Schedule
Retainage Management and Collection
Construction Accounting
Work in Progress
Trade Credit

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Contract Price

See Also:
Maintenance Contract
Completed Contract Method
Progress Billing for a General Contractor
Covenant Definition of a Bond Contract
Account Manager

Contract Price Definition

Contract price, defined as the price of a contract which is paid to a contractor upon completion, is used any time a contract exists. Due to the fact that a contract is an agreement to complete a certain type and amount of work, the contract price is fully paid to a contractor when they have completed the job which has been agreed upon. Generally, contract price includes a down payment, may include a few continuing payments, and ends with a final amount paid to close the contract.

Contract Price Explanation

Contract price, explained simply as the price which two parties agree on for a certain amount of work, is a very common concept. Common contracts are for construction, landscaping, leasing, and even the common mobile phone.

Contract Price Cost Analysis

Contract price cost analysis is essential to preventing a bad deal. Different contracts serve different purposes. The common landscaping contract, for example, does not have irregular expenses or a final completion date. The nature of this agreement lends itself to a payment schedule. Due to this, the contract price for landscaping is commonly paid on a per month basis. In contrast, a construction job has irregular expenses and a final completion date. In this case, the contract price will be paid differently. As stated above, they commonly have a down payment, regular payments, and a final construction retainer. This payment will be paid when the job is almost complete and the client only expects a few small changes.

Contract Price Escalation

Contract price escalation may occur partway through the process of completing the work. The reason for this could be increased expenses, increased time to complete the project, and more. In this case both parties will need to renegotiate the deal. Contract price adjustment can be very complicated when one party does not want to change. Still, it must occur despite the inherent difficulty of changing a standing agreement.

Contract Price Example

For example, Dwight is an agent for major hip-hop music stars. His work deals heavily with negotiations. Dwight helps to negotiate contracts for his artists. For Dwight, the final contract price clause is really the deciding factor of success or failure in his work. Dwight is working on a contract today. He has completed the agreement and is pleased. This price comes different than those above: a payment per album, a payment per concert or tour, travel and accommodations, and some for living expenses. Very different from the standard contract, Dwight knows the minor differences make major effects. If he had even left out living expenses, his artist may have come out of the deal with little to show for it. Dwight must keep a constant state of awareness to make sure he does not make a mistake. Dwight goes home and has a sigh of relief.

Today, he has been successful at his work. He knows every day can not be this good. So, he resolves to celebrate his successes and mitigate his failures. This way, he will keep his perspective where it needs to be.

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IRS Cracks Down on Employee Misclassification

I recently came across an interesting Wall Street Journal article discussing how the IRS has begun cracking down on employee misclassification. This is where employers misclassify workers as independent contractors to avoid payroll taxes and other employment-related expenses.  Many small businesses use contract workers in order to stay lean and, with the new healthcare changes on the horizon, using contractors is becoming even more enticing.  So what’s a small business owner to do?

IRS Cracks Down on Employee Misclassification

Here’s what the article says:

Internal Revenue Service auditors showed up with little warning at Brian Robinson’s staffing firm in Atlanta a year ago, seeking to verify that a dozen outside contractors he [hired] to handle his information-technology services weren’t… full-time staffers.

The audit was part of a government crackdown on employers who misclassify workers as independent contractors to avoid paying payroll taxes, and other employment-related expenses.

Mr. Robinson says the auditors ultimately found that his 30-year-old family business, TRC Staffing Services Inc., with its 100 permanent employees and up to 20 temporary workers, was in the clear. But he says the audit was “nerve wracking” because tax law doesn’t make it easy to distinguish between full-time staff and independent contractors doing full-time work. He says the legal distinction can be confusing even for an employer with his decades of experience in the labor market.

The appeal of using outside workers is growing as many small businesses struggle to stay lean. Some employers also are turning to contractors to avoid hitting the 50-employee threshold that would require them to pay for employees’ health insurance, starting next year, under the federal health-care law, or pay a penalty.

[Prevalence of Employee Misclassification]

State studies have shown that local businesses misclassify anywhere from 10% to more than 60% of their workers as independent contractors. Many business owners blame the complex tax code, which doesn’t offer black-and-white standards for telling the difference. The distinction is based on the employer’s degree of control over a worker, the length of the relationship, and a series of other factors. But such factors are open to interpretation. Past court cases on the issue have had different outcomes, providing little guidance.

In the past three years, the IRS, working with the Labor Department and officials in more than a dozen states, set a goal of investigating 6,000 employers, like Mr. Robinson, to ensure their workers are properly classified. Since September 2011, the government has collected $9.5 million in back wages for more than 11,400 workers who were misclassified as independent contractors by their employers, the Labor Department says.

[Boosting Tax Revenue]

The crackdown is aimed in part at boosting tax revenue. Employers don’t pay or withhold income taxes, Social Security, Medicare or unemployment taxes for independent contractors, as they do for staff workers. The U.S. Treasury estimates that forcing employers to properly classify their workers—while tightening so-called “safe harbor” rules that provide them with leeway in determining who is and isn’t an employee—would yield $8.71 billion in added tax revenue over the next decade.

Despite the threat of a payroll audit, more small employers are finding that independent contractors are essential to remaining competitive. The number of small firms that rely on outside contractors, for everything from technology services and public relations to marketing and sales, has grown sharply over the past five years, according to SurePayroll, a Chicago-based payroll-management firm whose clients are small employers.

The firm says that the proportion of contractors on the 80,000 small-business payrolls it processes every month has nearly doubled over past six years… [It has risen] to 6.7% last month from 3.4% in February 2007.

[Independent Contractor]

“As economic situations get tougher, that’s when everyone is looking to cut costs,” says Lisa Petkun… [Lisa is a] partner in the tax-practice group at law firm Pepper Hamilton LLP in Philadelphia. “It’s significantly cheaper to have an independent contractor.”

Using independent workers gives employers flexibility to hire only when there is work to be done, and leaves them with fewer tax obligations—and thus less paperwork—than do regular full-time workers. Using contractors also can cut benefits costs: they typically aren’t eligible for such benefits as health insurance and paid maternity leave.

A Michigan State University study estimates that contractors can save employers as much as 40% on labor costs. Indeed, some business owners say the IRS audits could stifle their ability to grow as demand picks up.

“I’m either going to hire someone full-time to do a job or we just won’t do it,” says Ciaran Dwyer, chief executive of 3t Systems Inc., a Denver-based IT company with 65 full-time workers. His firm relies on about a dozen outside contractors at any given time, depending on demand, he says.

Rather than risk an audit, and perhaps costly penalties—Mr. Robinson, the staffing-firm owner, says many of his small-business clients are rushing to convert any long-term contract workers into permanent staff.

[Payroll Audit]

Mike Johnson, a human-resources manager in Atlanta with over 35 years of experience with small employers, ranging from commercial insurance to telecommunications firms, says a payroll audit is a major disruption for a small business. “Apart from the legal expenses, the downtime is just not worth taking the risk,” he says.

In January, the IRS extended an amnesty program designed to encourage employers to voluntarily reclassify contractors as employees by waiving some penalties. Under the program, employers pay as little as 1% of the wages paid to their reclassified workers the previous year, rather than the full amount they owe in back taxes. So far, 1,000 employers have signed on since the program was launched in 2011, the agency says.

In recent years, Congress has proposed various bills to clarify the definition of independent contractors, including as recently as December, though none of the bills has passed.

Chris Whitcomb, tax counsel for the National Federation of Independent Business, a small-business lobbying group, says that without a clear definition of who counts as an independent contractor, many employers don’t know whether they are complying with tax rules “until they get audited.”

Does your business use contract workers?  If so, how will these changes affect you?  I’d love to hear your thoughts.

Read the original article here.

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employee misclassification

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